On the Bloomberg-Murdoch Trail Part 2

EDITOR’S NOTE: This is Part Two of an ongoing investigation of the symbiotic relationship between Rupert Murdoch, his company News Corporation, and Mayor Michael Bloomberg and his privately held company Bloomberg LP.

When the New York State Education Department last month awarded a $27 million no-bid contract to News Corporation’s Wireless Generation to install a questionable data entry system tracking public school students statewide, none were more surprised than CaseNex CEO Marsha Gartland.

The contract comes after the city spent more than $80 million with Wireless Generation to install their troubled ARIS system to track student progress, only to see about 30 percent of the city’s high schools slowly abandon ARIS for CaseNex’s DataCation system for about $10,000 a year from the school’s discretionary funds because the system is easier to navigate.

“We sure would have liked a chance to bid on it. The scale of work we’re doing right now is on par with what they’re doing,” said Gartland. “But I sense in New York State people are powerless in these sorts of things.”

Gartland said she was particularly shocked that the no-bid contract went to a News Corp. company because it recently hired Joel Klein, who worked with Wireless Generation when he was the chancellor of the city’s Department of Education (DOE).

“I’m surprised by the contract, especially because of Klein’s involvement. I’m sure they (the state Education Department) would have known there’s at least an appearance of ‘conflict of interest’. Certainly, everyone asks that question,” said Gartland.

Gartland isn’t the only person asking about the contract, as sources say the state Assembly’s Education Committee is also drafting a letter to send to the Education Department expressing concern about a possible “conflict of interest” with Klein.

Also studying the contract is state Comptroller Thomas DiNapoli, who must sign off on it by early September, and his spokesperson Mark Johnson said News Corp.’s recent hacking scandal could factor into its decision. Business ethics for affiliated firms are considered as part of an official review for awarding any contract, he said.

The $27 million no-bid contract comes from a $700 million federal allocation awarded to the state over four years, of which $256 million comes to the city.
Of that $256 million, $222 million will go towards computer-based data systems, which could help explain Murdoch’s hiring of Klein to head his new education division, and his purchase of Wireless Generation shortly after hiring Klein for $360 million.

The money could also help explain Bill Gates being a major donor to New York City schools.

This also leads to speculation that money might be a bigger motivation than improving education as public/private partnerships continue to play a vital role in the city’s DOE.

Bloomberg’s concerns and private life

Of these mogul’s interest in education, Bloomberg’s appears more peripheral as his privately held company (Bloomberg LP) continues to grow from $4 billion to $18 billion through expensive subscriptions to his business terminals that include extra fees for specialty add-ons to the terminal in such subjects as law and government.

Sources said that Bloomberg’s motivation is more in staying publicly relevant than in aquiring more wealth through the growing market in education. This need to stay relevant motivated his flout of the law so he could have a third term as mayor after the rise of Barack Obama kept him from running for president.

This led to his two chief deputy mayors leaving city government. This includes Ed Skyler, who is now an executive vice president in charge of global public affairs for Citigroup, Inc., and Keven Sheeky, who now heads government relations and communications at Bloomberg LP.

Bloomberg also has links to Americans Elect, an organization that plans on nominating someone for the 2012 presidential election. Journalist Thomas Friedman wrote a very favorable view of the organization in a recent New York Times column.

Bloomberg’s Deputy Mayor Patricia Harris is also the Chair and CEO of the Bloomberg Foundation, which gives millions of dollars away to many non profits in the city. Harris was cleared from the city’s Conflict of Intertest Board to serve in both roles.
Harris is married to Mark Lebow, who Bloomberg has appointed to the MTA board.

According to sources, Bloomberg is friendly with Murdoch and runs into him at charity events and other social gatherings in the city. Former DOE Chancellor Cathie Black also runs in these circles and knows both men fairly well.

According to a recent New York Times story, Joel Klein and his wife often dined with Murdoch and his wife while Klein was still chancellor for the DOE.

When this paper repeatedly asked Bloomberg spokesperson Stu Loeser to characterize the mayor’s relationship with Murdoch, it chose to evade the question and instead e-mailed a Bloomberg-related response from a press conference when a reporter asked for the mayor’s comments on the News Corp. scandal in England.

“You know, I’ve only worked, I think, with Rupert Murdoch on one thing, and that’s immigration,” Bloomberg told reporters. “And I could just tell you he has been very helpful, he understands the problems and- the needs of this country and he works very hard, and a pleasure to work with.”